Aging and Financial Services: With and Without Employment

> Posted by Danielle Piskadlo, Senior Program Specialist, CFI

Many retirement plans in the United States ask, “What is your number?” Meaning, at which age do you wish to retire? It’s a question that implies it will be up to you – that you will decide when the time has come for you to leave the workforce. However, according to recent reports on National Public Radio (NPR), many older workers, especially in the United States, are being pushed out of the workforce and finding it increasingly hard to find employment. Perhaps retirement plans need to start asking, “At which age will you be forced to retire?”

The Center recently published Looking Through the Demographic Window, which highlights that in many middle income countries a demographic window is opening where there will be more workers than dependents, creating an opportunity for economic growth. One of the reasons there will be more people in the workforce is because people are living longer, and therefore, it is expected, working longer.

A recent blog post by Yuwa Hedrick-Wong of MasterCard points out that countries cannot always take advantage of demographic opportunities. He comments that in sub-Saharan Africa, where youth are the dominant demographic group, “without adequate investment in educating and providing health care for the young…all that a society can expect are demographic burdens of mounting youth unemployment and underemployment.”

Arguably, the same thing is true when the elderly become the dominant demographic group, especially in developed countries where jobs are becoming more and more specialized and technology focused. People are living longer and therefore are willing and able to work longer, but will they actually be a valued and welcomed segment of the workforce?

It seems that a few other trends may need to be considered when talking about an aging population and workforce, and chief among them are the rapidly increasing pace of technological changes, and the possible “ageism” that might accompany those rapid changes in technology.

As the Center’s publication points out, when we peek through the demographic window, it is going to be increasingly important in middle and upper income countries to talk about retirement savings and other financial plans to prepare people for a longer than expected retirement.

As older workers struggle with unemployment, some combine part-time jobs, some rely on their children, and some use the equity in their homes to support themselves. I expect that we will hear more about reverse mortgages as a financial service in the years to come. Increasingly, and excitingly, many are becoming entrepreneurs, so it was great to read another CFI blog post about Microfinance as a Tool for Active Aging. One NPR interviewee said his only chance of getting hired was to hire himself.

Image Credit: ALAMY

Have you read?

From Demographic Burdens to Dividends: Implications for Financial Inclusion

First Report from FI2020’s Mapping the Invisible Market Highlights Implications for Financial Inclusion as World’s Demography Changes

Microfinance as a Tool for Active Aging